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GAO Says Government Pesters Wounded Soldiers Over Debts

By Donna St. George
Washington Post Staff Writer
Thursday, April 27, 2006

Nearly 900 soldiers wounded in Iraq and Afghanistan have been saddled with government debts as they have recovered from war, according to a report that describes collection notices going out to veterans with brain damage, paralysis, lost limbs and shrapnel wounds.

The report from the Government Accountability Office, to be released at a hearing today, details how long-recognized problems with military computer systems led to the soldiers being dunned for an array of debts related to everything from errors in paychecks to equipment left behind on the battlefield.

The problem came to light last year, as soldiers' complaints began to surface and several lawmakers became involved. The GAO had been investigating other pay problems caused by the defense accounting system and was asked by Congress to investigate debts among the battle-wounded.

The new report shows a problem more widespread than previously known.

"We found that hundreds of separated battle-injured soldiers were pursued for collection of military debts incurred through no fault of their own," the report said.

Last fall, the Army said 331 soldiers had been hit with military debt after being wounded at war. The latest figures show that a larger group of 900 battle-wounded troops has been tagged with debts.

"It's unconscionable," said Ryan Kelly, 25, a retired staff sergeant who lost a leg to a roadside bomb and then spent more than a year trying to fend off a debt of $2,231. "It's sad that we'd let that happen."

Kelly recalled the day in 2004 when, months after learning to walk on a prosthesis, he opened his mailbox to find a letter saying he was in debt to the government -- and in jeopardy of referral to a collection agency. "It hits you in the gut," he said. "It's like, 'Thanks for your service, and now you owe us.' "

The underlying problem is an antiquated computer system for paying and tracking members of the military. Pay records are not integrated with personnel records, creating numerous errors. When soldiers leave the battlefield, for example, they lose a pay differential, but the system can take time to lower their pay.

The government then tries to recoup overpayments, docking pay for active-duty troops and sending debt notices to those who have left the military. Eventually, the government sends private agencies to collect debts and notifies credit bureaus.

The computer system is so broken that 400 soldiers killed in action were listed as owing money to the government, although no debt notices were sent, the report said.

A total of $1.5 million in debts has been linked to the 400 fallen soldiers and 900 wounded troops. Of the total, $124,000 has been repaid. The government has waived $959,000, and the remainder of $420,000 is still owed.

Michael Hurst, a former Army finance officer in Arlington who has studied the issue, said the military should have taken action years ago to prevent the debts from being created.

"It's a complete leadership failure," he said. "We can't expect the soldiers to notice mistakes in their pay that the paid professionals have failed to notice and correct."

Although the GAO report focuses on battle-wounded soldiers who have separated from the military, there are probably others who were still on active duty when their debts caught up with them, Hurst said. Factoring those in, "I would say thousands" are affected by the problem, he said.

The GAO report said that 73 percent of the debts were caused by pay problems, including overpayments, calculation errors and mistakes in leave. Other debts were created when soldiers were billed for enlistment bonuses, medical services, travel and lost equipment.

House Government Reform Committee Chairman Thomas M. Davis III (R-Va.), who is holding the hearing, has called the phenomenon "financial friendly fire." Yesterday, his spokesman, Robert White, reacted to the report, saying: "Literally adding insult to injury, the systems that are supposed to nurture and support returning warriors too often inflict additional wounds to their financial health."

In one case cited in the GAO report, the debts meant that a soldier's family had no money to pay bills and had to send an 11-year-old daughter to live out of state.

At today's hearing, Army and Defense Department officials are expected to testify about what is being done to correct the problem. A database of soldiers wounded in action has been created, but the GAO suggested that more needs to be done, including congressional action to forgive more soldiers' debts and provide refunds in certain cases.

Previously the GAO had issued 80 recommendations for improving the Army payroll processes. Army officials have said they are at work on those recommendations. An Army spokesman did not return calls yesterday requesting comment.

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